Category: Canada

Altus Group (AIF-T) marked two decades of constant growth, adaptation and technological advancements within its business when it recently celebrated 20 years as a publicly traded company.

Members of Altus Group’s executive team rang the opening bell on the Toronto Stock Exchange on May 6 to mark the date of its 20th anniversary on the exchange. 

Jorge Blanco, the commercial real estate service and technology provider’s New Jersey-based chief strategy officer, was at the company’s Toronto headquarters recently and spoke with RENX about Altus’ past, present and future.

“If you look at the different chapters, the story — from the acquisition of the PricewaterhouseCoopers valuation compliance practice to the acquisition of ARGUS and the continued growth of what was the property tax business until we divested the company — has been preoccupied primarily with how we assist our clients improve their performance vis-a-vis their commercial real estate portfolio,” Blanco said. 

“That’s been one constant.” 

Acquisitions have been important

Altus has made more than 50 acquisitions since its inception, some large though the majority have been relatively small. That has helped the company enter new international markets and expand its suite of services with additional complementary capabilities.

The 2011 acquisition of ARGUS Software, Altus’ largest to that point, began the strategic pivot to serve the commercial real estate industry with technology to complement its valuation advisory services.

Other key acquisitions since then include:

• RealNet in 2014, which enhanced Altus’ data and market research and bolstered its technology stack;
• Finance Active in 2021, which expanded Altus’ debt software capabilities;
• StratoDem Analytics and Reonomy in 2021, which added artificial intelligence and machine learning technology while expanding data capabilities to solve challenges with real-time data-driven insights and predictive analytics capabilities;
• and Forbury in 2023, which introduced software with cloud-based solutions tailored for the Asia-Pacific market to help users make informed decisions on when best to refinance, refurbish, reposition or divest their assets.

Over the past four years, Altus has made significant investments in data standardization, integration and data science. This has enabled it to develop a sharper focus on leveraging its technology, analytics and expertise to elevate its global intelligence platform and assist clients with enhancing decision-making, mitigating risks and achieving higher returns.

“Altus is continuously evolving — modernizing our own capabilities, acquiring those that bolster our platform, and anticipating what’s next,” Blanco said. “We’re not just keeping pace with change, we’re helping define what’s next for commercial real estate through smarter technology, deeper data and a bold vision for what’s possible.”

Blanco left KPMG in New York City in March 2021 to join Altus as its executive vice-president and chief product officer. He was named chief strategy officer in February.

“My job is to ensure that I’m keeping the company about three or four steps ahead of the customer in what’s coming,” Blanco explained. “If I’m thinking about something that happened three days ago, I’m not doing my job. I need to be thinking three, five and 10 years out.”

Recent innovations and looking forward

Altus recently expanded its ARGUS Intelligence capabilities into benchmarking to provide access to insights to enhance acquisition, disposition and investment management strategies. It’s only available in the United States now but will soon follow into Canada.

“Analytics is a core component to that, as our clients want to do much more rapid simulation of the potential decisions that you could make,” Blanco said. “We all know these assets are not movable.

“They’re reshapable, but they’re not movable. So clients need to begin to consider all of the different factors that impact their value.”

While Altus isn’t currently contemplating taking its technology and expertise and adapting it for new industries, there are adjacent businesses related to commercial real estate where it could make future inroads.

“When you look at the full value chain, a lot of sectors that are not necessarily commercial real estate by nature — be it insurance, commercial lending, banking or debt investing — there are lots and lots of spaces that definitely are in our wheelhouse on areas that we should be supporting,” Blanco said. 

“While we will remain very focused on the expertise we have around properties, assets, et cetera, there will be an expansion of these services that will become much more consumable for folks that are not necessarily directly in the commercial real estate space.”

Sale of property tax business

Altus closed the $700-million sale of its property tax business to Dallas-based Ryan on Jan. 2, accelerating its transformation into a pure-play software, data and analytics platform.

Some of the sale proceeds have been reinvested in buying its own stock because leadership is bullish on Altus’ future prospects.

“The emphasis that we’ve put on free cash flow per share, combined with the capital on the balance sheet, gives us a lot of optionality to continue to grow, experiment and innovate,” Blanco said. 

Altus has a market cap of approximately $2.5 billion.

“It has continued to perform, but it could always perform better,” Blanco said. “We definitely think that there are other companies out there that get better multiples than we do.”

Blanco acknowledged parts of the commercial real estate industry have struggled over the past couple of years and that economic uncertainty is impacting monetary policy and growth. 

“If you look at the fundamentals of the company, we’ve been growing top line and we’ve been growing bottom line consistently for a number of years, essentially meeting all the expectations of the market.”

This is all the more so when it comes to manufacturing job losses in Scotland, perhaps because of the extent to which this sector has dwindled over the decades.

The news that up to 400 jobs are at risk at Falkirk bus manufacturing firm Alexander Dennis is first and foremost a massive blow to the people directly affected. It means there is a very real prospect of hundreds more people joining the ranks of the unemployed in an area hit hard by the closure of Scotland’s only oil refinery at Grangemouth, with the loss of around 400 job losses.

It is always disheartening when concerns over widespread job cuts come a distant second in the minds of those seeking to score political points from corporate decisions taken to reduce workforces.

Yet, coming so soon after further job cuts were announced by oil and gas giant Harbour Energy in Aberdeen, a move blamed by the company on the UK Government’s energy profits levy, the proposed cuts at Alexander Dennis have led to an impression of decline in Scottish industry.

Opponents of the Scottish Government have been quick to assert that events at Alexander Dennis are yet more evidence of the administration’s flawed strategy and failure to protect industry and jobs. These critics repeatedly point to the delays and cost over-runs in the delivery by the nationalised Ferguson Marine shipyard of two ferries to serve the west coast and the time it has taken to find a buyer for Prestwick Airport, which was taken into state ownership in 2013, in justification of these claims (even though Prestwick is now regularly making profits and beginning to build a lucrative air freight operation). The Scottish Government has also come under for fire failing to deliver the amount of “green” jobs in the transition from oil and gas production to renewable energy that ministers forecast.

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But in the matter of Alexander Dennis, which has been part of NFI Group since the North American company acquired the firm for £320 million in 2019, any culpability on the part of the Scottish Government seems hard to discern. Winnipeg-based NFI, which is listed on the Toronto Stock Exchange, looks simply to have assessed its costs and concluded that it can save money by consolidating its UK bus body building operations into a single site. Unfortunately for Scotland, the site selected for this work is in Scarborough, not Falkirk.

Euan Stainbank, the Scottish Labour MP for Falkirk, said the Scottish Government should have done more to support Alexander Dennis by ordering more buses from domestic manufacturers to serve local networks. He said Greater Manchester had bought more than five times the amount of buses from Alexander Dennis than had been purchased to serve the industry in Scotland.

But ultimately in Scotland it is down to private bus companies to decide which manufacturers they wish to buy their vehicles from – not the Scottish Government.

Naturally, those fighting to prevent the proposed cuts in Falkirk are urging Scottish ministers to do all they can to stop or limit the amount of redundancies during the consultation period that is now under way. Perhaps there is some financial incentive that can be offered to entice NFI to change its mind, but it is hard to be optimistic. Paul Davies, president and managing director of Alexander Dennis, hinted at the limitations of UK policy when the proposed cuts were announced on Wednesday.

“While stakeholders have been sympathetic of the situation, the stark reality is that current UK policy does not allow for the incentivisation or reward of local content, job retention and creation, nor does it encourage any domestic economic benefit,” he said.

“We have warned of the competitive imbalance for some time and would like to see policy and legislative changes that incentivise the delivery of local benefit where taxpayer money is invested. We strongly believe funding that supports public transport should lead to investment in local jobs, domestic supply chains, technology creation and a recurrent tax base.”

There is a certain, painful irony to the situation too. While the Grangemouth refinery was declared by Petroineos to be no longer financially viable in the face of global competition and the drive to net zero, the Alexander Dennis site in Falkirk has been involved in the production of buses powered by electrical batteries and hydrogen, in other words at the cutting edge of modern transport technology. As veteran Scottish politician Kenny MacAskill, leader of the Alba Party, noted, it is “perverse when Scotland is awash with renewable energy and is the base for the UK’s green hydrogen that a company specialising in hydrogen buses is forced to relocate elsewhere”.

Sadly, past experience in Scotland suggests that once a company decides to close operations, there is no going back. Petroineos could not be persuaded to change course at Grangemouth, and back in 2009 Diageo proceeded to shut down its Johnnie Walker plant in Kilmarnock despite significant protests at the time.

It looks for all the world that the proposed cuts at Alexander Dennis are destined to become another sad chapter in Scottish industrial history, and one that will be especially poignant given the company’s proud and long manufacturing legacy.

Highlights 

• Adriatic Metals enters a trading halt 
• Speculation builds around corporate activity 
• Share price shows notable momentum 

Adriatic Metals (ASX:ADT), a prominent producer of critical minerals and gold, has placed its shares in a trading halt as it prepares for an announcement regarding a possible corporate transaction. The pause in trading is scheduled to remain in effect until 16 June or until further updates are disclosed by the company. 

This development follows a wave of market speculation and investor interest sparked in May, when reports emerged suggesting Adriatic Metals was in discussions with Canadian mining group Dundee Precious Metals (TSX:DPM). The potential transaction has been described as being in the early stages but is believed to carry a value exceeding £700 million (approximately $935 million). 

The prospective deal, though not yet confirmed, has already had a measurable impact on Adriatic Metals’ stock performance. Over the past month, the company’s shares have climbed approximately 26.9%, reflecting heightened market anticipation. As of the latest close, shares were trading at $5 on the Australian Securities Exchange and at £2.41 ($5.04) on the London Stock Exchange. 

Adriatic Metals, which has built its reputation through strategic mining developments in Europe, is being closely watched by investors and analysts alike, given its strong portfolio of critical mineral assets and a growing global focus on resource security. The potential tie-up with Dundee Precious Metals could strengthen both companies’ positions in the global mining sector, particularly in the context of increasing demand for key metals used in clean energy and advanced technologies. 

Market capitalization for Adriatic Metals currently stands at around $1.72 billion, underpinned by both speculation and solid fundamentals. The market’s interest is likely to stay elevated until a definitive announcement is made, potentially shaping the direction of the company’s operations and investor outlook for the coming quarters. 

Until then, the spotlight remains firmly on Adriatic Metals as stakeholders await clarity on what could be a transformative corporate decision. Investors and industry observers are advised to stay tuned for official communications by or before 16 June.